Concept Introduction:
Direct write off method refers to the method in which the debtors which are declared uncollected or bad will be expensed in the income statement directly without transferring to the allowance for doubtful debts.
Liquidity metric days' sale in receivable is a metric made on the basis of measuring the collectibles frequency ability on their due dates. In general, it measures the ability of the company in converting the receivables into cash.
Profitability metric return on sales is the one which helps in analyzing the working performance of the company i.e. its growth, profits and gains and also reflects the relation between the expenses and revenue of the company.
The effect of each transaction on liquidity metric days' sale in receivable and profitable metric return on sales.
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Survey of Accounting (Accounting I)
- Allowance method Using transactions listed in £6-S. indicate the effects of each transaction on the liquidity metric days’ sales in receivables and profiability metric return on sales.arrow_forwardRefer to RE6-3. Assume Long records accounts receivable and sales using the net price method. Prepare the related journal entries for Long.arrow_forwardCompute for the following RED 1. Accounts receivable turnover 2. Average collection periodarrow_forward
- How do you calculate Accounts Receivable (AR) Turnover and the Number of Days' Sales in Receivables? How is the amount of change method Calculated in horizontal financial statement Analysis?arrow_forward_____________ are used to measure the speed in which various accounts are converted into sales or cash. Select one:. a. Liquidity ratios b. Profitability ratios c. Activity ratios d. Debt ratiosarrow_forwardHow to calculate the account receivable turnover ratio in a balance Sheet and income statement (explain it with the items on the income statement and balance Sheet eg.inventory, current receivable, current liability..and so on.arrow_forward
- d) Payables payment period in days e) Number of days inventory on hand 2. Analyse and interpret the following ratios calculated above a) Receivables collection period b) Payables payment period c) Number of days inventory on handarrow_forwardWhich of the following calculations of receivable turnover is correct? A. Number of days in the year divided by receivable turnover. B. Net sale on account divided by average receivables. C. Cost of goods sold divided by average inventory. D. Net income divided by net sales.arrow_forwardAssess the company’s level of liquidity and comment on its ability to meet its short-termfinancial obligations using the following ratios d. Accounts Receivable Turnover ratioe. Inventory Turnover Ratioarrow_forward
- How do you calculate accounts receivable turnover? Select an answer: Take the beginning A/R balance, add the ending A/R balance, divide by two, then divide the result into sales revenue Take the beginning A/R balance, add the ending A/R balance, then divide the result into sales revenue divided by two Take the ending A/R balance, subtract the beginning A/R balance, then divide the result into sales revenue. Take the starting A/R balance, subtract the ending A/R balance, then divide the result into sales revenue divided by two.arrow_forwardHow do you calculate the estimate using the percentage of sales and aging of accounts methodsarrow_forwardPlease help with the following question COMPLETION STATEMENTS 1.Notes and accounts receivable that result from sales transactions are often called______________ receivables. 2.Two accounting problems associated with accounts receivable are (1) ______________ and (2) ______________ accounts receivable. 3.The net amount expected to be collected in cash from receivables is the _____________. 4.When credit sales are made, _________________ Expense is considered a normal and necessary risk of doing business on a credit basis. 5.The two methods used in accounting for uncollectible accounts are the ____________ method and the ______________ method. 6.Allowance for Doubtful Accounts is a_____________ account which is ______________ from Accounts Receivable on the balance sheet. 7.When the allowance method is used to account for uncollectible accounts, ____________ is debited when an account is determined to be uncollectible. 8.The _________________ basis of…arrow_forward
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning